Samsung Will Unveil Its Plans to Appease Angry Shareholders on Tuesday

Samsung Electronics said it will disclose plans to boost shareholder value on Tuesday—a move that comes amid pressure from U.S. fund Elliott Management to split the company in two and provide more in payouts.

The U.S. activist hedge fund, which owns 0.6% of Samsung, called on the South Korean tech giant in October to divide itself into a holding vehicle for ownership purposes and an operating company, as well as pay out 30 trillion won ($26 billion) in a special dividend.

The Seoul Economic Daily, citing an unidentified source, reported on Monday the firm will say it plans to consider a split. Samsung declined to elaborate further on Monday on its plans, although it said last month it is considering buying back more shares.

A split in two has long been a subject of market speculation with analysts noting that such a move could help the Samsung Group founding family heirs to boost their control of the world’s top maker of smartphones, memory chips and televisions.

“It’s difficult to argue with the logic of Elliott’s proposals,” said David Smith, head of corporate governance at Aberdeen Asset Management Asia. “A simpler structure is certainly preferable, and yes most would agree they can afford to pay out more.

“What is important is that these changes should benefit all involved, including family, group, and minority shareholders,” he said.

Samsung ssnlf is also keen not to alienate investors at a time when it is reeling from a disastrous withdrawal of the fire-prone Galaxy Note 7 smartphone that the firm projects will cost 6.1 trillion won in profits over three quarters.

Its offices have also been raided by prosecutors as part of a widening political scandal involving a confidante of President Park Geun-hye.

Samsung said it will hold a conference call at 9:30 a.m. local time (12:30 a.m. GMT) on Tuesday to discuss its plan.

Other measures proposed by Elliott, which unsuccessfully challenged a controversial 2015 merger of two Samsung Group affiliates, includes the return of at least 75% of free cash flow to investors and the appointment of some independent directors.

New shareholder return plans would also follow a tightening of control by de facto Samsung Group leader Jay Y. Lee, who took over the reins after his father and Samsung patriarch was incapacitated following a May 2014 heart attack.

Samsung Group has sold non-core assets and pushed through a merger of two affiliates in 2015 to consolidate stakes in key affiliates under a company controlled by Jay Y. Lee and his two sisters, as the founding family moves to secure a stable transfer of control.

Lee also recently became a board member at Samsung Electronics.

“Even if Samsung Electronics does not comment on specifics such as the timing of a split … the firm will at least say it will implement ownership structure changes in a reasonable manner,” HI Investment said in a report on Monday.

Here’s How Corporate Growth Is Killing The Economy

It’s easy to see it in fast-forward: companies like Twitter and LinkedIn, who leapfrog each other to achieve sky-high valuations, end up incapable of delivering the hundred-fold returns that investors expect. Sure, the companies have terrific revenue. Twitter brings in over half a billion dollars a quarter. But if and when this revenue reaches a plateau–as it has for Twitter–the company may as well be considered dead.

That’s because by taking on too much capital–by selling themselves to the financial markets–they surrender their underlying businesses to the more important imperative of share price. Investors don’t invest in order to own a company; they invest in order to sell it.

And while those of you in more traditional businesses probably can’t help but smile at these flailing upstarts your shaudenfreud may be unearned. If you’re a public company, or more driven by the metrics of your debt structure than those of the markets in which you actually operate, you, too, are caught in the growth trap.

Startups just do all this in fast-motion because they’re pumped up on digital steroids: a developer with a great idea accepts venture capital and a high valuation, at which point the venture capitalists are in charge. The company must pivot away from its original mission in order to grow enough to reach a “home run” in the form of an acquisition or IPO. They’d rather the company die, than live as a moderate win.

This forces startups to adopt scorched-earth policies in order to achieve a complete monopoly over a market–like Amazon did with books, or Uber seeks to with taxis–for the sole purpose of conquering another vertical. It doesn’t matter that they suck their original market dry,; there’s always another on which to feed.

The startup scene may be a tragedy in terms of lost opportunities and irreparably disrupted markets. But it’s just a technologically amplified version of what we see happening to pretty much every member of the S&P 500.

Shareholders incentivize CEOs to push for growth at any cost, even if that means cannibalizing their own companies with write-offs, or stoking expectations with acquisitions that–like 80% of all mergers and acquisitions–lose money for everyone involved.

Growth is the core command of corporate America. I once attended the retreat of a Fortune 100 company where the CEO led a few hundred executives in a chant of “5.3!” their growth target for the coming year. If one of the world’s 100 biggest companies isn’t big enough, than what is?

By valuing capital gains above all others, we end up extracting the value of our marketplaces and rendering them incapable of generating economic activity. As a Deloitte study showed, corporate profits over net worth have been decreasing for 75 years. Corporations are great at accumulating capital, but terrible at deploying it. They vacuum the money off the playing field altogether, impoverishing the markets and consumers–not to mention the employees–on whom they ultimately depend.

Every CEO both knows this, and suspects it will be his undoing. I get more calls from them every year, asking me what they can do. Why me? Because this isn’t a challenge of finance but communication. They need a way to explain to their shareholders that the growth mandate is killing their companies.

It’s also killing our economy, our job market, and our planet. Growth for growth’s sake may have worked for the colonial empires of the 16th Century, but it’s not sustainable–certainly not at the exponential rates shareholders demand in a digital economy.

Rather, we must accept the invitation of a digital age to optimize our businesses less for the accumulation of capital than the velocity of money – the speed and volume of transactions.We need to get money out of the cold storage of share price, and back into circulation.

On a policy level, yes, the easiest fix would be to tax capital gains the same or more than dividends and payroll earnings. If we’re trying to encourage transaction and the deployment of money, we can’t maintain tax policies that punish it.

It would sure make it easier to tell shareholders that the main benefit of owning stock may not be the opportunity to sell it at a higher price, but the dividends of holding it. Dividends are scoffed at on Wall Street as evidence that a company has no more room to grow, when they should be celebrated as proof that the enterprise is alive and well.

Earnings never bothered family businesses, which have historically demonstrated more resilience and longevity than those owned by shareholders. Yes, they make more money in the long term, and do better than their counterparts in every climate except bubbles. That’s because family businesses are obsessed not with growth but sustainability. Instead of thinking how much money they can extract and leave to their grandchildren, the owners of family businesses think about how they can build a business that can continue to provide jobs and revenue for them.

What they realized centuries ago–and what failing growth-based businesses need to learn today–is that the mindless pursuit of growth ultimately demands that you extract value any way you can, whether it’s from labor, the environment, or your customers. By pursuing sustainable revenue instead of relentless growth, companies quickly realize that it pays to make other people rich.

It’s not about redistributing the spoils of business after the fact through taxes or foundations. That’s too late. It’s more about seeing how making other people rich is actually good for business. It’s behind the success of eBay and Paypal, which arose to promote transactions and help others create value, rather than treat their customers like resources to be extracted.

To the business that has escaped the growth trap, the world stops looking like territories to conquer, and more like markets with which to engage.

Plenty, says a new study that examined CEO pay, stock price performance, and return on assets in a database of the 1,500 largest U.S. public companies for each year from 1994 to 2013. The 10 highest-paid CEOs in any given year presided over an average $1.4 billion loss in market capitalization, compared to their more modestly compensated peers.

There’s more: Even if a given CEO made the top 10 for only one year, the stock lost value for three years afterward, compared to the shares of other companies in the same industry. And, if a company with a CEO in the top 10 made an acquisition or underwent a merger, “the market reacted more negatively,” pushing the share price down farther than for comparable deals made by lower paid CEOs, says Mike Cooper, a finance professor at the David Eccles School of Business at the University of Utah and a co-author of the study.

“We’re not saying that high CEO pay is necessarily bad,” he adds. “But we did find a clear link between high CEO pay and decreased financial performance.”

The main reason, Cooper says, is that extravagant pay gives rise to what the study calls “overconfidence,” or the belief that “you have better information and know more than everybody else,” which leads to a penchant for risk—making too many acquisitions, over-investing in dicey projects that usually fail, and generally spending too much of the company’s money.

“This is why the highest paid CEOs in any industry tend to do things that destroy shareholder wealth,” Cooper notes. A telltale sign of overconfidence, according to the study: chief executives with costly delusions of grandeur often hold “a larger number of in-the-money stock options that they haven’t exercised than other CEOs,” he says.

They’ve often been in the top job longer than their lower-paid peers, too. Cooper and his colleagues found the highest pay and the most overconfident behavior among chief executives who had been in office for an average of six years. “That’s not surprising,” Cooper notes. “The longer tenure means a CEO has had more of a chance to make friends with the board, or to put friends on it.”

Chief executives in the study who had held the post the longest and made the most money also showed more lackluster financial results than their peers at other companies, at least by one measure: return on assets over the course of their tenure underperformed their industries’ ROA by 12%.

Although Cooper is careful to say that the study isn’t prescriptive, the research does suggest that setting term limits for CEOs would help to curb both out-of-control pay and expensive, overconfident moves. Shareholders might suffer less long-term damage to their investment if no one who’s paid more than 90% of his or her industry peers could hold the top job for longer than, say, three years. Right now, that doesn’t seem to be happening: The average time in office of Fortune 500 CEOs in 2013 climbed to 9.7 years, nonprofit research firm The Conference Board reported in April. That was the longest average tenure reported since 2002.